Claims of Fraud Could Get Student Loans Forgiven

More than 7.5K former students say their colleges defrauded them
By Michael Harthorne,  Newser Staff
Posted Jan 20, 2016 6:19 PM CST

(Newser) – Over the past six months, more than 7,500 Americans have applied to have their cumulative $164 million in student loans forgiven, claiming their colleges defrauded them, the Wall Street Journal reports. And as Gawker clarifies: "We are not talking here about the stereotypical 'Oberlin art history major who found out their lavish degree was worthless.'" No, these students are taking advantage of an almost entirely unused 1994 law that allows student loans to be forgiven if current or former students can prove their schools "used illegal tactics to recruit them," the Journal reports. Student activists found the law last year, and so far it's mostly been used against for-profit chain colleges, such as ITT Technical Institutes and Art Institutes.

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"I feel robbed of my life," one student, who owes $114,000 after attending an Art Institute, tells the Journal. Another says he was promised an industry job after graduation only to have the Art Institute get him a gig at Office Depot for $8 an hour. Meanwhile, the Education Department has been shocked by the obscure law's sudden popularity. The department is now looking at the law, which it claims is too vague and potentially costly to taxpayers. Steve Rhode at the Huffington Post writes that students who feel defrauded by for-profit schools should get their claims in ASAP, as pressure will soon start mounting on politicians to repeal the law. "I would bet the government will be closing that door soon," he says. (Read more student loans stories.)

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